Friday, 31 January 2014

India’s cumbersome
arms procurement procedures and a plodding ministry of defence (MoD) bureaucracy
have long been blamed for shortfalls in combat capability. Now there is another,
more worrying, reason --- a growing crisis of funds, magnified by the lack of
tri-service coordination.

Slowing
economic growth and a weak rupee have left insufficient money for the
military’s ambitious modernisation programme. With no tri-service chief to
coordinate and prioritise the needs of the army, air force and navy, their
15-year “Long Term Integrated Perspective Plan” is just an unaffordable wish
list.

So dire is
the funding shortfall, say senior ministry officials, that negotiations with
vendors are dragged on simply because there is insufficient money for new contracts.
The capital budget (meant for new equipment) goes almost entirely on previous
years’ purchases, for which instalments are paid over 5-10 years. This year
only Rs 2,955 crore of the military’s capital budget of Rs 73,444 crore was available
for new purchases.

Meanwhile,
revenue expenditure rises as the army grows in size, even as pay commissions
increase the cost of manpower. Last month, Rs 7,870 crore was transferred from
the already stressed capital account to meet the burgeoning revenue
expenditure.

In these circumstances,
major acquisitions languish. These include the planned purchase from BAE
Systems of 145 M777 light guns for a mountain strike corps (MSC) on the
Himalayan border. With no order forthcoming, BAE Systems has halted its M777 assembly
line in the USA; the contract cost has risen from $647 million to a potential $885
million. Instead of raising the MSC in five years as planned, it will now be
raised in eight years to spread its Rs 64,700 crore cost.

Also stuck
in the pipeline are contracts with US company, Boeing --- for 22 AH-64 Apache
attack helicopters and 12 CH-47F Chinook multi-mission helicopters, together
worth some $2 billion; and a billion-dollar repeat order for four P-8I maritime
aircraft to supplement the eight already bought. Delay is inevitable in the
purchase of another ten C-17 Globemaster III, worth $4 billion; as also in the
$3 billion purchase of Honeywell engines to extend the service life of the
IAF’s hundred-odd Jaguar fighters.

Seemingly
impossible now is a contract for 126 Rafale medium multi-role combat aircraft
(MMRCA). The IAF would need to fork out Rs 15,000 crore as the 15 per cent
signing amount, even at the lower end of the Rafale’s estimated price band of
$16-20 billion.

Meanwhile,
the weaponry bought this financial year --- like the December 27 purchase of
six C-130J Super Hercules transport aircraft for a billion dollars --- will
swell the “committed liabilities” for coming years, leaving a diminishing
percentage for new purchases. If the Hercules are delivered over four years, the
MoD would need to pre-commit four annual instalments of Rs 1,560 crore each.

The proportion
of pre-committed instalments has risen each year (see Fig 1 below). In 2010-11, the
capital budget allocated Rs 17,278 crore for new contracts and Rs 28,408 for
“committed liabilities”, or instalments due. In 2011-12, there was Rs 9,467 for
new contracts, while Rs 32,995 crore went on committed liabilities. Last year,
the money for new contracts dropped to Rs 5,520 crore, with Rs 54,840 crore pre-allocated
for instalments. This year, there is just Rs 2,955 crore for new contracts,
while Rs 64,680 crore is pre-committed. Next year, without a sharp hike in the
defence budget, there may be nothing for new contracts.

Fig 1: Capital Budget: declining purchasing power

Year

Capital Budget

Expenditure

New Contracts

Committed Liabilities

Total

2010-11

43799

17278

28408

45686

2011-12

52998

9467

32995

42462

2012-13

66032

5520

54839

66032

2013-14

73444

2955

64680

(Figures include expenditure of army, navy and air force only)

This crisis
has been predictable in the absence of a tri-service commander to coordinate army,
air force and navy spending. Each year, budgetary figures show no correlation
between planning and expenditure (see Fig 2 below). In 2011-12, the military asked for a capital
allocation of Rs 88,680 crore; the government allocated far less, and the
military eventually spent just 59 per cent of what it had projected. Last year,
capital expenditure was just 63 per cent of the Rs 93,828 crore the military
had asked for. This year the military will spend a mere 58 per cent of the
projected requirement of Rs 1,23,911 crore.

Former army
vice chief, Lieutenant General Shantanu Chaudhary, says that appointing a
tri-service chief is essential for easing the pressure on military budgets
---both capital and revenue. A permanent chairman of the chiefs of staff
committee (COSC), which the Naresh Chandra Task Force recommended to the prime
minister last year, would rationalise the roles and capabilities of the three
services, many of which are wastefully duplicated today. Expenditure could be reduced
and efficiency increased by getting the army, navy and air force to share
infrastructure, logistics, command systems and even platforms. He cites
multiple examples of needless duplication --- electronic warfare capabilities created
by all three services; complex command, control and intelligence networks that each
service has created separately, instead of a common platform; and separate
surveillance systems that result in thrice the expense and half the efficacy.

“The three
services essentially look out for themselves. The senior-most service chief,
who is the ex-officio Chairman COSC, naturally looks out for his own service
rather than the tri-service good. Sensible modernisation demands a tri-service
chief, who can prioritise procurement, plan budgeting and slash the duplication
and triplication,” says Chaudhary.

Monday, 27 January 2014

India’s
Military Conflicts and Diplomacy: An Inside View of Decision Making

By General V.P. Malik (Retired)

HarperCollins Publishers, India

300 Pages

Rs
699/-

After his important
debut book on the Kargil conflict, which he had personally overseen as chief of
the Indian Army, General VP Malik has now opened another small window into the functioning
of government with what he titles an “inside view of decision making” during
several strategic crises. Malik personally played a role in each incident that
he describes, having occupied key appointments in the military operations
directorate during his long and distinguished military career. In describing
these events, he provides useful primary source inputs for historians and sets
an example for high government officials who are too often held back from
documenting events by out-dated notions of secrecy.

Malik’s
book provides vignettes into India’s misconceived intervention in Sri Lanka in the
late 1980s, which eventually took more than a thousand soldiers’ lives; the
more successful intervention in the Maldives in 1988, when Indian paratroopers
were landed in Male to neutralize an attempted coup; and the multinational
operation led by Indian peacekeepers in Sierra Leone in 2000 to rescue comrades
who had been held hostage by armed rebels. A long and interesting chapter adds
fresh detail and insights to Malik’s earlier book on the Kargil conflict of
1999.

The author
writes in the simple, straightforward prose of a professional soldier, without
obfuscation or rhetorical flourishes. There is none of the self-obsession that
permeated the recent book by another army chief, General VK Singh. The author
simply recounts events as they happened without disassociating himself from setbacks,
or suggesting that he was the driving force behind every success.

The
exception to this is when the author apportions responsibility for the glaring
intelligence failure at Kargil, which left the door open for hundreds of
Pakistani soldiers to cross the Line of Control (LoC) and occupy Indian
defences overlooking Kargil, Dras and Batalik that had been vacated for the winter.
Malik notes that the civilian intelligence agencies had provided no warning,
but he glosses over the fact that this was, first and foremost, a military
intelligence and operational failure. This will disappoint the many who believe
that the army should have apportioned blame all the way up to the corps
commander in Srinagar, rather than merely making a scapegoat of the local
brigade commander at Kargil.

Malik is characteristically
restrained while recounting his few disagreements with his civilian masters. At
the height of the fighting in Kargil, when India accepted Pakistani Prime Minister
Nawaz Sharif’s offer to send his foreign minister, Sartaj Aziz, to New Delhi, Malik
worried that a mixed message might go out to his soldiers, who were engaged in
bitter hand-to-hand fighting in Kargil. His solution was to send out a cable to
all the formations involved in the fighting, which is a case study for his clarity
on the military and political dimensions of the conflict. Clausewitz would have
approved.

Malik
conveys a sense of the army’s frustration, when the Pakistan Army flatly denied
that its soldiers had crossed the Line of Control, even as the Indian Army was
recovering identity cards and documents from Pakistani bodies in Kargil, which
clearly identified them as soldiers, not militants. Bizarrely, after the
Pakistani director general of military operations (DGMO) refused to accept this
in his phone conversations with his counterpart, the Indian DGMO, General
Nirmal Vij, eventually took his fax number and faxed the documents to him.

Interestingly,
Malik makes a powerful case that Nawaz Sharif was not the dupe that he has
successfully portrayed since then, but was fully aware of Operation Badr, as
General Musharraf codenamed the Kargil plan.

Operation
Cactus, India’s intervention in the Maldives after Sri Lankan Tamil mercenaries
attempted a coup against President Abdul Gayoom, is often hailed as a case
study for the notion of Indian power projection. However, Malik’s gung-ho
eyewitness account --- he travelled to Male with the paratroopers --- does not evoke
the impression of a highly professional national reserve force responding to a
crisis. The Agra-based parachute brigade had no Rapid Response Force that the
could quickly deploy (a shortcoming that has been rectified since), as a result
of which Indian paratroopers landed in Male a full 14 hours after President
Gayoom’s early-morning SOS.

Fortunately,
the operation went off flawlessly. Even as order was restored in Male, an
Indian warship, INS Godavari, rescued that country’s education minister, Ahmed
Mujuthaba, his Swiss wife and his mother-in-law from the Tamil mercenaries who
had taken them hostage. Malik recounts that Rajiv Gandhi, after being informed
about the success, congratulated the naval chief, Admiral JG Nadkarni, with the
quip, “Good job, Admiral, but I doubt if Ahmed Mujuthaba will forgive the
Indian Navy for rescuing his mother-in-law!”

Like
service chiefs before him, Malik highlights the disconnect between military
leaders and the national political leadership, particularly in the realm of
nuclear weaponry and strategy. Noting that “the military tends to be excluded
from the nuclear decision-making process”, Malik prescribes the early
appointment of a chief of defence staff or tri-service chief.

In this
consistently interesting book, the reader’s interest flags only in the longish
sections on diplomacy, and on relations with neighbouring countries like
Myanmar and Nepal. Nevertheless, Malik has conveyed important lessons, albeit
in short story style, that our defence planners must heed.

Sunday, 26 January 2014

An unexpected and worrying question mark has been placed
over the Indian Navy’s expensive new Boeing P-8I multi-mission maritime
aircraft (MMA), which were bought to allow the navy to monitor the Indian Ocean
and to destroy enemy submarines that it detected.

According to a Bloomberg news report, the US Department of
Defense (Pentagon) has found that the US Navy’s version of the aircraft, the
P-8A, is ineffective at both surveillance, and in detecting and destroying
submarines.

Michael Gilmore, the Pentagon’s chief weapons inspector, has
reported that the P-8A “is not effective for the intelligence, surveillance and
reconnaissance mission and is not effective for wide area anti-submarine
search”, according to Bloomberg, which cites Gilmore’s annual report on major
weapons.

The Indian Navy, which has bought eight P8-I aircraft for US
$2.1 billion, is Boeing’s first international customer for this platform. Its cutting-edge
sensors, radios and submarine-killing weaponry are integrated onto a special
Boeing 737 aircraft, giving it the endurance to fly 1,100 kilometres to a
patrol area, remain “on station” for six hours, and then fly back to base.

Yet the Pentagon’s report, which has not been officially
released, points out flaws in the aircraft’s radar performance, sensor
integration and data transfer. It says that current version of the P-8A had not
overcome “major deficiencies” identified in combat testing in 2012-13.

Contacted for a response, the Indian Navy and the MoD did
not reply. The Boeing Company has declined to comment, stating that the Pentagon
report had not been officially released. The US embassy in New Delhi did not
respond to an emailed request for comments.

For Washington, as for New Delhi, this news is worrying. The
first P-8A of 117 that the US Navy plans to buy was deployed to Kadena, in
Japan. It is operating along with others in the tense maritime environment of
the Sea of Japan, tracking Chinese submarines. The three P-8Is already
delivered to India (with five more due to come by 2015) are based at Arakonam,
near Chennai, to watch over India’s 7,500-kilometre coastline and the ocean
stretch from the Strait of Malacca to the Strait of Hormuz.

In November, the US Navy had declared the P-8A ready for
combat deployment, while admitted that the US Navy had developed “software
upgrades to correct deficiencies.” Vice Admiral Robert Thomas, who commands the
US 7th Fleet, backed the P-8A, stating on January 10 that it
“represents a significant improvement” over the P-3 Orion, which it replaced in
the US fleet.

The P-8I’s sensors include a Raytheon multi-mode radar to
detect aircraft, ships and submarines, while another belly-mounted radar looks
backwards, like an electronic rear-view-mirror. When a submarine is suspected,
the aircraft drops sonobuoys into the water, which radio back suspicious
sounds. A “magnetic anomaly detector” on the P-8I’s tail also detects
submarines. The P-8I can destroy ships and submarines with Harpoon missiles,
Mark 82 depth charges and Mark 54 torpedoes mounted on the aircraft.

Saturday, 25 January 2014

Shinzo Abe to discuss inter-governmental
agreement this weekend in Delhi

By Ajai Shukla

Business Standard, 25th Jan 14

New Delhi’s growing defence partnership with Tokyo could
take wing with the US-2 (Utility Seaplane Mark 2), a one-of-a-kind amphibious
aircraft that has Indian naval planners goggle-eyed. The mammoth 47-tonne
aircraft, carrying 18 tonnes of load, can take off from, or land on, a 300-metre
stretch of water or land, its four giant engines needing just 7 seconds to get
airborne. With a range of over 4,500 kilometres, it can patrol areas 1,800
kilometres away, and react to an emergency by landing thirty armed troops, even
in 10-foot waves. Like the C-17 Globemaster III, which lands vast payloads on
high altitude dirt runways, the US-2 attracts the Indian military for the
unprecedented options it provides.

India and Japan have discussed a US-2 sale since 2011, when
the Indian Navy sent several companies a Request for Information (RFI) about
amphibious aircraft. Only Shinmaywa offered capabilities that the navy wants
for patrolling island territories like the Andaman & Nicobar chain, which
is 1,200 kilometres from Chennai and hundreds of kilometres long; or for flying
out spares and technicians to disabled warships out in the Indian Ocean.

Business Standard understands that New Delhi and Tokyo are
discussing signing an Inter-Governmental Agreement (IGA) to cooperate on the
US-2, similar to the IGA between New Delhi and Moscow to co-develop a fifth
generation fighter. An IGA recognizes the strategic importance of a procurement
programme, and takes it out of the purview of the restrictive Defence
Procurement Procedure (DPP).

When Prime Minister Manmohan Singh visited Tokyo last May,
the joint declaration issued after his meeting with Japanese Prime Minister
Shinzo Abe noted: “They decided to establish a Joint Working Group (JWG) to
explore modality (sic) for the cooperation on the US-2 amphibian aircraft.”

Interestingly, the JWG is not headed on the Indian side by a
ministry of defence (MoD) official, but by Secretary DIPP (Department of
Industrial Policy and Promotion). This suggests a perspective larger than
merely a defence acquisition, with the programme including industrial
partnership, capacity building and finance, in addition to issues like
certification, flight-testing, training, etc.

Defence cooperation between New Delhi and Tokyo has been
growing, in tandem with apprehensions about an assertive China. Japan’s
National Security Strategy, which was published on December 17, 2013, and a
follow up document --- the National Defense Programme Guidelines (NDPG) ---
mandate increased cooperation with India. The NDPG states, “Japan will strengthen
its relationship with India in a broad range of fields, including maritime
security, through joint training and exercises as well as joint implementation
of international peace cooperation activities.”

In contrast, the NDPG views China thus: “China has been
rapidly advancing its military capabilities in a wide range of areas without
sufficient transparency through its continued increase in military budget.
China is also rapidly expanding and intensifying its activities in waters and
airspace, showing its attempts to change the status quo by coercion. Japan
needs to pay careful attention to these activities with strong interest. They
are also concerns for regional and global security.”

There are a mere seven US-2 in service worldwide, all in a
“search and rescue” role with the Japanese Maritime Self Defense Force (JMSDS),
as the Japanese navy is termed. Some twenty countries want to buy the US-2, but
Article 9 of Japan’s Constitution holds it back from warlike activities,
including the export of military equipment. In 2011, Japan’s cabinet issued a
waiver, citing the strategic partnership, to allow the US-2 to be supplied to
India. The utility of the US-2 in “benign constabulary missions”, such as
anti-smuggling and anti-poaching, allows it to be passed off as a non-military
aircraft.

With Japan self-limiting defence spending to under 1 per
cent of GDP, Tokyo regards India’s military as a partner for achieving
economies of scale in defence production. Japan’s National Security Strategy,
published on December 17, 2013, notes that “it has become mainstream to
participate in international joint development and production projects in order
to improve the performance of defense equipment, while dealing with the rising
costs… the Government of Japan will set out clear principles on the overseas
transfer of arms and military technology, which fit the new security
environment.”

After just five Japanese prime ministerial visits to India
in half a century, the Indo-Japan strategic relationship was kick-started in
2000 with Prime Minister Yoshiro Mori’s visit to New Delhi. In 2006, his
nationalistic successor, Shinzo Abe, signed a Global and Strategic Partnership
with India. The two prime ministers meet yearly, and a “two-plus-two” meeting brings
together the defence and foreign ministers. Japan has a “Security Cooperation
Agreement” with India, which it earlier had only with the US and Australia. In
June 2012, the two navies conducted the first JIMEX (Japan-India Maritime
Exercise) in the Sea of Japan, which was repeated last month in the Bay of
Bengal.

Asia watcher Dan Twining, writing in Foreign Policy, sees
Tokyo as the core of a coalition that prevents China from dominating East Asia,
just as Great Britain prevented Napoleon and Hitler from dominating Europe in
earlier centuries. That is why, says Twining, when Japan, Australia, US and
India joint forces in the Malabar naval exercise in 2007, “Chinese analysts
correctly identified the grouping as one that could stymie China's ‘natural’
leadership of Asia.”

Wednesday, 22 January 2014

The Indian
Council for Research on International Economic Relations (ICRIER) has released
a survey on how Indian and Pakistani companies perceive trade normalization
between the two countries.

The survey,
which was unveiled in New Delhi today at ICRIER’s 2nd Annual Conference on Normalizing India-Pakistan Trade has found
optimism amongst 400 Indian and Pakistani firms, 200 from each country, spread
across several cities, and including manufacturers, traders, freight forwarders
and clearing agents.

According
to Nisha Taneja, who headed the survey, Indo-Pak bilateral trade, which is currently
$2.7 billion dollars in the formal sector and an estimated $1.79 billion
dollars in the informal sector (2012-13 figures), has the potential to grow by
a multiple that ranges from 0.5 to 27.

Most firms polled
believed that unfavourable events, like firing on the Line of Control (LoC) and
terrorist strikes, do not have a highly negative impact on trade. All 200
Pakistani companies surveyed believed that political events had a “very low” to
“average” impact on trade. Only 65 per cent of the Indian companies surveyed
held the same view, with 35 per cent perceiving a “high” or “very high”
correlation between politics and trade.

On the
question of market access, only 28 per cent of Pakistani companies felt that
they were allowed “low” market access in India. The majority --- 56 per cent
--- believed that they were allowed “average” market access, while 16 per cent
felt that they enjoyed “high” market access in India.

Indian
companies were noticeably happier about their access to the market in Pakistan.
Only 18 per cent believed that they had “low” or “very low” access. A quarter
believed that the access was “average”, while more than half perceived “high”
or “very high” access. Most of the 400 companies believed that there would not
be much change to the current levels of access.

Interestingly,
political animosity does not deter buyers in one country from buying goods from
another. Importers and exporters in both countries were almost unanimous that a
“Made in India” or “Made in Pakistan” label was no deterrent. Several
exhibitions in India that featured Pakistani textiles had made inroads into the
Indian market. And so big is the demand in Pakistan for Indian jewellery that
jewellers in that country were now selling domestic jewellery under a “Made in
India” label.

Expectedly,
businesspersons from both countries reported serious difficulties in getting
visas for travel. Only 8 per cent of Indian and 3 per cent of Pakistani traders
found getting a visa easy. Another bugbear is mobile communications, since
neither country allows roaming facilities to visitors from the other.

Despite the
difficulties, businesspersons from both sides remain optimistic that bilateral
trade will increase. Most believe that it will grow by up to 25 per cent next
year, significantly higher than the average annual growth of 9 per cent for
Indian exports and 23 per cent for Pakistani exports. A high percentage believe
that is will grow by up to 50 per cent.

The Indo-Pakistan
trade relationship has traditionally reflected the difficult political
relationship. India granted Most Favoured Nation (MFN) status to Pakistan in
1996, but Islamabad linked reciprocity to the resolution of the Kashmir
dispute. After the terrorist attack on India’s parliament in December 2001, New
Delhi stopped trade via air and land till 2004.

Until 2005,
a restrictive maritime protocol made trade by sea difficult. There is only one
rail line --- across the Wagah-Atari border --- for rail trade. And road-based
trade only began in 2005.

Trade
normalisation began in 2004 with talks between the two commerce secretaries.
Since then, political events have had a minimal effect on trade. Bilateral
trade has risen almost ten-fold from about $300 million in 2003-04. Last year,
after attacks on Indian soldiers on the Line of Control, cross-border trade was
stopped, but resumed within days.

In November
2011, it was agreed that Pakistan would transition from a small positive list
of items that could be traded to a negative list. In March 2012, Pakistan
adopted a negative list of 1,209 items. Meanwhile, India took steps to address
Islamabad’s longstanding complaint of “non-tariff barriers” against Pakistani
imports.

Only now
has Islamabad decided to accord India MFN status. Believing that this would be
political sensitive, Pakistan’s commerce minister, Khurram Dastagir, told
Business Standard, “We’re now officially calling it Non Discriminatory Market
Access, or NDMA.”

Tuesday, 21 January 2014

The coming
week will see an important battle in the struggle to transform India from the
world’s largest arms importer into a country that produces a respectable modicum
of the weaponry it needs. The battle will be fought in the Defence Acquisition
Council, the apex decision making body of the ministry of defence, which
will decide whether to scupper the development of an indigenous basic trainer
aircraft (BTA) by Hindustan Aeronautics Ltd (HAL) by paying Swiss aerospace
company, Pilatus, to build 106 BTAs in India.

The Indian
Air Force (IAF), which has always backed import, howsoever expensive, over the
painstaking process of development, is squeezing the MoD to give Pilatus the
contract. HAL, with a record of time and cost overruns, but with a new
confidence stemming from the successful Tejas fighter and proven helicopters
like the Dhruv, insists that it can easily build a BTA. HAL rightly points out
that 75 basic trainer aircraft --- the PC-7 Mark II --- have been contracted
from Pilatus as the IAF had wanted; but the defence ministry had also ruled that the remaining
106, needed to make up the IAF’s overall requirement, should be developed and
built in India. To this end, HAL has committed close to Rs 200 crore of its own
money in designing the Hindustan Turbo Trainer–40 (HTT-40).

In turning its
face on this agreement, the IAF has cunningly played the “national security”
card, declaring that India’s security depends on basic training, to hell with
indigenisation. In a paper sent to the defence ministry on November 4, the IAF has said that
it did not trust HAL to develop a trainer. This even though the
Bangalore-headquartered company has played a major role in building the Tejas
fourth generation fighter.

For the ministry, the options are clear. On one side is the logic of inducting trainer
aircraft quickly to allow enough pilots to be trained. Opposing this is the
urgent need for indigenisation; and the economic rationale of obtaining much
cheaper maintenance, overhaul and spares all through the 30-40 year service
life of an indigenous aircraft, compared to expensive overseas vendors. These
life-cycle costs add up to four to five times the procurement cost of an aircraft. There
is also the growing understanding that building indigenous aircraft will create
an aerospace industry eco-system across the country, providing production
volumes, jobs and expertise in high-tech manufacture.

The IAF’s fundamental
logic is that HAL’s record of delays renders it unsuitable to be entrusted with
a development programme. Aerospace enthusiasts know that delay is the only
certainty while developing aircraft. Every major on-going fighter project has
been marked by years of delay --- the F-35 Joint Strike Fighter in the US; the
Eurofighter and the French Rafale that the IAF is buying. When even mature
aerospace industries face chronic delays, it is short sighted to pillory
India’s underfunded aerospace establishment for having taken three decades to
learn what its foreign counterparts have assimilated in a century of government
nurturing. The Tejas fighter is a tale of delay only to the thoughtless; in
fact, it represents an admirable technological leapfrog.

The second
major worry for the MoD should be the snake oil economics that the IAF backs
its case with. Arguing that the Pilatus trainer is cheaper than the HTT-40, the
IAF (speaking apparently for Pilatus) has quoted Rs 4,520 crore for 106 PC-7
Mark II trainers, i.e. Rs 42.64 crore per aircraft. In reaching this figure the
IAF has strangely omitted the cost of ground equipment (Rs 452 crore); spares
(Rs 678 crore); cost of ToT (Rs 252 crore); cost of manufacturing
infrastructure (Rs 385 crore), simulator (Rs 218 crore); role equipment (Rs 226
crore) and transportation (Rs 63 crore). This takes the bill to Rs 6,925 crore,
which comes to over Rs 65 crore per PC-7 Mark II. This is much higher than the
HTT-40.

Moreover,
the HTT-40 is being designed, developed and built in India, while the PC-7 Mark
II is merely being assembled. The IAF proposal states that 10 of the 106 Pilatus
trainers would be imported fully built; 28 in semi-knocked down (SKD) kits; and
68 completely knocked down (CKD). The IAF has proposed that one of its
maintenance units, 5 Base Repair Depot in Sulur, Tamil Nadu, will assemble
these kits into aircraft. Assembly imparts zero aerospace knowhow, and is a mere
façade of indigenisation. For this, Pilatus would be paid Rs 2,405 crore. It
would be cheaper to just buy the PC-7 Mark II fully built rather than pay so
much for a fig leaf.

Finally, in
passing this hare-brained proposal the MoD would risk serious trouble with
audit and vigilance agencies. The BTA tender was for purchasing 75 fully built aircraft,
not for building them in India under ToT. Vendors who
lost out to Pilatus could legitimately contend that they would have won had ToT
been a part of the tender. Already, Korean Aerospace Industry had contested
the award of the contract to Pilatus. Moreover, the Defence Procurement Policy
of 2013 (DPP-2013) explicitly prefers indigenous development to buying from
overseas or building in India with ToT. If it chooses to ignore this crucial
policy directive, the MoD would have proven that indigenisation remains a
slogan.